For example, individual countries government bonds could be replaced by Eurobonds.

Converting all outstanding government bonds with the exception of Greece s into Eurobonds would be by far the best remedy.

(Over the course of the euro s first decade, interest rate spreads between ten year government bonds nearly disappeared.)

Government bonds, on the other hand, have no covenants.

In the eurozone, banks are vulnerable to sovereign debt crises because they hold a lot of government bonds frequently issued by their country of origin.

Interest rates on government bonds were racing upward.

The dam is being funded by government bonds and private donations.

Adding cocos to government bonds will require solving a host of technical problems.

As a result, the rating on the Government's recent bond issue has been upgraded.17

But markets would happily gorge on bonds backed by the full faith and credit of the eurozone.

Hence, the Fed s intervention in the housing market is really an intervention in the government bond market the purported switch from buying mortgages to buying government bonds is of little significance.

Holders of European government bonds believed that they knew what they had bought.

This week, such government debt paid around 3.2 , which is very low by historical standards.

The widening spreads between the interest rate on German eurobonds and some of the other countries euro bonds show that global bond markets take this risk seriously.

At this point, inflationary expectations will increase, long term government bond yields will rise, and the recovery will be crowded out.

European governments are not in a position to instruct the ECB to purchase government bonds.

Bond market vigilantes already have taken aim at Greece, Spain, Portugal, the United Kingdom, Ireland, and Iceland, pushing government bond yields higher.

The proposed crisis mechanism would effectively insure government bond purchasers against the risk of insolvency, but it would entail deductibles that compel bondholders to assume some of the investment risk.

If Greece had remained outside the eurozone and retained the drachma, the large increased supply of Greek bonds would cause the drachma to decline and the interest rate on the bonds to rise.

The best policy should categorically exclude bondholders from the set of potential beneficiaries of government bailouts.

Later, the Basel accords whetted banks appetite for more government bonds by ruling them virtually risk free.

The first ever bond issued by a national government was issued by the Bank of England in 1693 to raise money to fund a war against France.

Increasingly, the small spreads between sovereign bonds relied on the implicit assumption that no euro area member would be allowed to get into major difficulties, despite the constraints imposed on intergovernmental rescue operations.

Economists like to subtract the nominal government bond yield from the inflation indexed bond yield of the same maturity to get a market estimate of the inflation rate from now to that maturity date.

Germany s credit rating would not be endangered, because Eurobonds would compare favorably with bonds issued by other major countries.

The credibility of its pledge depends as much on what it will do (buy unlimited quantities of government bonds) as on what it will not do (buy them from countries that do not fulfill conditionality).

The fundamental benchmark interest rates in modern financial markets are the so called risk free rates on government bonds.

With the government assuming credit risk, mortgages become as safe as government bonds of comparable maturity.

BEIJING Despite shaky economic fundamentals, US government securities are usually regarded as a safe haven.

It is not surprising that bonds issued by the European Financial Stability Facility (the eurozone s rescue fund) are trading at a substantial premium over German debt.

Long term inflation indexed bond yields have fallen to around 1 a year, or less, in the United States, Canada, the United Kingdom, and the eurozone.

Investors subsequent efforts to price in the risk of a eurozone breakup not the volume of sovereign debt caused bond yields to spike.

And countries facing depressions and rapidly weakening inflation typically face very low borrowing costs investors purchase government bonds for want of profitable alternatives.

In response, central banks should purchase government bonds for cash in as large a quantity as needed to push their prices up as high as possible.

Since high risk premiums on government bonds endanger the capital adequacy of banks, half a solution is not enough.

Forcing bondholders to accept a haircut on what they will be paid also promises to discourage reckless lending to eurozone sovereigns in the future.

Extending this idea to sovereign debt, government bond covenants could stipulate that if a sovereign s debt GDP ratio exceeds a specified threshold, principal and interest payments to bondholders would be automatically reduced.

Because China s government does not owe much debt to the public, the PBC sold out its holdings of government bonds in 2005.

Meanwhile, rising fiscal deficits in most economies are now pushing up the yields of long term government bonds. Some of the rise in long rates is a necessary correction, as investors are now pricing a global recovery.

Fifth, some argued that highly indebted sovereigns would push investors into gold as government bonds became more risky.

And restructuring weakens banks, which generally hold large portfolios of government bonds, thus making them less able to finance the economy.

Long term government bond yields are already very low, and a further reduction will not significantly change private agents borrowing costs.

French government bond interest rates fell 30 to record lows, less than 50 basis points above German government bond rates.

Yields on Spanish and Italian bonds, which had risen to unsustainable heights over fears of a eurozone breakup, fell sharply after the announcement.

If interest rate spreads on Spanish and Italian government bonds are any guide, bondholders are no longer betting on a eurozone breakup.